Can Microsoft’s Zune HD challenge the iPod?

Hopes were high when Microsoft introduced the Zune in 2006. As the first MP3 player to feature Wifi and an FM radio, the Zune stood out by allowing owners to share music wirelessly with other Zuners. The concept never took off; Zune adoption was limited, while Apple’s iPod line continued to dominate the media player space.

In late September Microsoft launched its new Zune HD media player.  Rather than simply upgrade and refine the original Zune concept, Microsoft seemingly followed the lead of the iPod Touch, building the device around a 3.3 inch touchscreen, internet browsing capability and games/application downloads via the Zune Marketplace.  Apple made a series of announcements in the week prior to the Zune’s launch, including improvements to iTunes, the iPod Touch and iPod Nano, providing me with an opportunity to compare consumer interest in the two media player brands.

Had the Zune gained any traction against the iPod or had Apple’s announcements of the prior week tempered enthusiasm for the Zune HD launch?  To further explore this I looked at Compete’s data to see how interest shown by online consumers in the Zune HD during its launch week compared to that of the iPod Nano and iPod Touch in the weeks surrounding their recent upgrades.

  • The addition of a video camera to the iPod Nano resulted in a 700% week over week lift in traffic to Nano specific pages at during launch week
  • Traffic to, on the other hand, only saw a comparatively modest 90% week to week increase when the Zune HD launched
  • What’s far more damaging to the Zune HD’s prospects is that the iPod Touch, which hasn’t changed drastically since its redesign in September 2008, drew virtually identical levels of interest from online consumers as the entire site during the first two weeks immediately following the Zune HD launch

Whether a result of Apple overshadowing the Zune HD’s launch, or the lack of a differentiating feature, consumer interest in the Zune HD has been lukewarm.  With Microsoft’s decision to discontinue all other Zune products that competed with the iPod Nano and iPod Classic, the Zune HD remains as the company’s only bid to compete with Apple.  If early interest is any indication, the Zune HD could have a tough time grabbing a significant part of the market.